FX levels to watch – EUR/USD, GBP/USD, USD/JPY

The pound suffers a sharp sell-off after comments from the prime minister. Meanwhile, both EUR/USD and USD/JPY are looking relatively bullish.

Pound and dollar
Source: Bloomberg

GBP/USD targeting $1.2071

The prime minister’s interview over the weekend, in which she suggested the UK would withdraw entirely from the EU, has been another example of how fundamental news will continue to be the major driver in GBP crosses this year.

The small gains made over the past week have now disappeared, with the pair now targeting $1.2071 and $1.1943. 

EUR/USD could see 50-day SMA

Friday’s pullback was prompted by the stronger non-farm payrolls reading that lifted the US dollar (despite missing the headline number). However, the base built over the past two weeks around $1.04, and the fact that so far the key $1.05 level is holding, suggests that we will see more gains today, pushing back towards $1.06.

A close above this level could target $1.0646, the 50-day simple moving average (SMA), followed on by $1.0714 and then $1.0780 for the pair.

USD/JPY could see ¥115.15

The sudden drop towards ¥115 was reversed by the NFP reading, pushing the price back above the ¥117 level.

If this indicates that a turnaround is in play, we can expect to see ¥118.69, ¥120.40 and then ¥122.24 tested in due course. A bearish move for USD/JPY requires a definitive close below ¥116, and ideally below the low of last week at ¥115.15. 

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